The corporate affairs ministry has decided to act tough with public sector undertakings (PSUs) that have not prepared and submitted their financial statements with the registrar of companies. As many as 658 state-run PSUs have piled up 2,539 accounts, with some pending for as long as 26 years.
Such delinquency may be indication of a bigger problem brewing in these PSUs and has left the ministry worried, government sources said. In most cases, the pending period ranges from three years to 15 years. The ministry has now asked all state and Centrally-run PSUs to comply with the Companies Act, 1956, and prepare and furnish account details as per the Act at the earliest, a ministry source said.
According to data available with the government, the poorest compliance is in north-eastern states such as Arunachal Pradesh where there are five working state-run firms and two non-working PSUs with a total of 33 accounts pending for the last 11 years. Similarly, in Assam , there are 51 PSUs and there are 347 accounts pending for 24 years. Tamil Nadu is the only state where pendency is minimum. It has 75 PSUs of which 20 have not prepared their accounts for one to seven years.
Though up to date positions are not available it may be interesting to note that the CAG had carried out an audit of the functioning of RoC findings of which were featured in Audit Report on Non Tax Receipts No 9 of 2006. A critical analysis of various aspects of filing of returns, Investor Education and Protection Fund, and a host of other issues have been highlighted.
Is there any rule of law in existence in India? If that was so, then this could not have happened. Because from the first comment it clearly appears that even the CAG naver pointed tis out in its statutory annual reports to the President of India/State Governors.
I am in agreement with Mr A.BANNERJI.
THE LIST OF DEFAULTERS MUST BE CICULATED THROUGH pARLIAMENT AND DAILY nEWSPAPERS ALONGWITH NAMES OF THE bOARD OF dIRECTORS AND CFO ETC. WFON SHOULD BE DISQUALIFIED FOR HOLDING ANY POST OF DIRECTORSHIP IN ANY CORPORATE BODY. IT IS A SERIOUS MATTER AND MUST BE TAKEN UP SERIOUSLY AT MINISTER LEVEL.
The relevant queries that would necessarily arise in this context are:
1) there is no need for the Govt. to direct these companies in default since an enactment of Parliament (i.e., the Companies Act itself) provides for powers to deal with these instances of non-compliance, including the automatic removal of the names of these entities from the Register of the respective ROCs;
2) their ac/s are required to be audited by the CAG inter alia as per s. 625B of the Cos. Act, ant that being so, it is suggestive that such instances did not attract the notice of this constitutional body whose Commercial Audit teams must have been visiting the erring companies during the subject period;
3) there is no doubt that the central PSUs/companies are headed by the persons selected by the PESB (or, in some cases, by the politicians belonging to the party in power), while the state govt. PSUs are invariably the havens/reserved for the IAS and, this being so, the action could/can be initiated as per the relevant conduct rules to take action against them;
4) even more important is what the Central Govt. nominees on the Boards of the central PSUs /Financial Advisors/Finance Divisions in the respective administrative ministries have been doing and what action was even contemplated, if ever;
5) and, in this background, whether any action has ever been initiated/taken against the officers in the Ministries concerned (having regard, inter alia, to the number of Board meetings attended by them/the expenditure incurred on their TA-DA for attending the meetings-if held;
6) if the accounts are not presented to the ROC, naturally the a/c have never been drawn up either and, if so, Income-tax Returns have also not been filed by these delinquent companies along with audited ac/s or, even if filed, the Returns could not have been filed, as is required under the Income-tax Act, along with such audited a/cs;
7) it is certainly a moot point as to what, in view of (6) above, action/view has been taken in these cases, if at all, and, further, whether legal prosecution has ever been launched against these entities under the Income Tax Act for failure to submit (valid) returns of income and also whether the assessments ever made over the years resulted in any demand which were collected.
Will the public ever know as to what the final outcome of the reported move by the ministry is going to be, if ever the exercise is taken to its legally logical conclusion?